MAM Funds’ Callow sees strong commodities

Simon Callow, manager of the CF Midas Balanced Growth Fund, MAM Funds, believes the long-term fundamentals of commodities remain strong.

“With the exception of gold, commodities sold off aggressively in May, just as the UK market witnessed its largest ever IPO in Glencore, the Swiss based commodity trading business,” Callow said.

“Equity markets were generally weak as economic data out of the US suggested a slowdown in economic activity and the European sovereign debt crisis reared its ugly head once more as Portugal entered talks with the IMF.

“Exposure to fixed interest overseas was increased through a new investment in the Wealthy Nations Bond Fund managed by Stratton Street Capital. The fund invests globally in both sovereign and corporate debt with a focus on absolute value and with careful consideration given to the external balance sheets of countries i.e. their net foreign asset position. This enabled the fund to avoid debt issued from Spain, Greece and Portugal which all look vulnerable to a funding crisis. We have invested in the Singapore dollar class as the prospect for currency appreciation over the longer term is strong.

“Equity market weakness was used to add to positions in BG Group and restart a position in Xstrata. Xstrata was previously exited earlier in the year at much higher levels. Whilst short-term weakness can be expected given the commodity market sell-off, we believe that the long-term fundamentals of the commodities to which the company is exposed remain strong and that the current valuation assigned to the business is far from demanding.”

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